Currency movements have been modest over the trading session, with the main focus of attention being the first US Presidential debate of the campaign. The market voted that Clinton won decisively, as evidenced by the 2% recovery in the Mexican peso. MXN has been hammered over recent weeks as short positions have been placed as support for Trump has been rising in the polls. The short squeeze in the currency during the debate suggested those bets were being unwound.

Another possible interpretation is that Trump displayed such a dismal lack of understanding of basic economics, that his trade policies, if he were elected, would not be enacted. Trump claimed that Mexico’s VAT was a hindrance to US exports, seemingly oblivious to the fact that domestic Mexican production would also be subject to the tax if sold locally.

The CAD also strengthened during the debate, but those gains weren’t sustained as oil prices came under pressure, down 3%, as it becomes more obvious that an OPEC agreement to control supply won’t be forthcoming. Trump’s policy of unwinding NAFTA would be negative for the Canadian economy.

In other news, US consumer confidence rose to its highest level in 9 years and the release included a similar high for the “jobs plentiful” indicator. As far as we can tell, this hasn’t had a sustained impact on currency markets, but has helped support higher US equities.

NZD is up 0.3% to 0.7300 this morning, continuing its recovery after being sold down late last week after the RBNZ OCR review. AUD is up by a similar amount, trading at 0.7670, after earlier testing, and failing, to breach the 0.77 handle. NZD/AUD is flat at 0.9525.

On no news, the GBP has recovered and is trading close to its session high at around 1.3020. EUR dipped below the 1.12 mark, but is trying to recover and sits at 1.1225. JPY is flat at 100.30, having earlier failing to break the 100 support level.